News & Views

Opinion / The Driving Force of Disruption

The mass adoption of fully-automated vehicles is a much closer reality than you might think, and it's not just an issue for the automotive industry. With such a monumental change on the horizon, it’s time for all brands to think about the road ahead

For one day each year, it’s a total nightmare to work at Contagious.

That day was earlier this month, April Fool’s Day, when just about every brand on the planet competes for column inches by creating their own make-believe story. It’s all fun and games, but for us it turns into a day where our response to every single submission is: ‘Yeah it’s pretty cool, but is it actually real?’

Take Domino’s Pizza. The fast food giant followed up its great edible pizza box stunt of 2014 by announcing the world’s first fleet of fully autonomous delivery vehicles. The Domi-No-Drivers can navigate their way to your exact location, give you your Pepperoni Passion with extra garlic dip, and then zoom off into the distance – no small-talk or fumbling around for change required.

Much has been written about the rise of driverless vehicles, but as a quick recap: Google’s fleet of cars has already clocked up hundreds of thousands of miles, accident-free. Audi’s driverless RS7 topped 149MPH as it sped round the Hockenheim racing circuit in Germany last October. Mercedes-Benz unveiled a ‘mobile living space’ concept vehicle at this year’s North American International Motor Show. And Apple has been hotly tipped to move into the automated car market in the next few years – whether it’ll be controlling the dashboard or developing the actual vehicle, is still unknown.

Over the next couple of years, expect there to be a whole lot more to stoke the fire. Volvo has pledged to have a driverless model on the road by 2017, likewise General Motors. And Tesla is releasing a software update this year that will enable its current fleet to be driver-free 90% of the time. Musk, the company’s founder, says that ‘true autonomous driving, where you could literally get in the car, go to sleep and wake up at your destination,’ will be here by 2020.

There are, or course, serious hurdles that need to be overcome before these cars can control the roads. Not least in updating our current global infrastructure (roads, traffic lights, signs, etc.) to suit AI drivers, rather than human ones. This might give the auto industry a bit more time to prepare, but it’s only delaying an inevitable phase of disruption. As entrepreneur Zack Kanter wrote earlier this year: ‘Autonomous cars will be commonplace by 2025 and have a near monopoly by 2030, and the sweeping change they bring will eclipse every other innovation our society has experienced.’

STOP, COLLABORATE AND LISTEN

This is why I think that it’s important to pause for a second and think about how automated vehicles might affect other industries. Yes, auto brands will now have to adapt to a whole new mode of transportation. Yes, car ownership as a necessity is likely to diminish hugely (an analyst note from PWC estimates that the number of vehicles in the US could reduce from 245 million to 2.4 million – that’s a 99% reduction). And yes, tech brands might soon appear on the same consideration list as the likes of VW, GM and BMW. But let’s remember, the motor car has perhaps been the most important invention in 20th century life – it’s what our civilisation is built around.

Insurance is an industry that will obviously be affected. Morgan Stanley estimates that 90% of all road traffic accidents are caused by human error. So, with that eliminated, that’s a potential 90% reduction in premiums. With fewer accidents and fewer people to cover, insurance companies are staring down the barrel of a massive reduction in market size. Plus, less accidents mean fewer injuries, and fewer deaths. So that will impact the police force, ambulances and hospitals. McKinsey, for instance, believes that 150,000 lives could be saved in the US each year.

Now think about taxis. Uber has already given them a run for their money, but the company’s CEO has been clear about wanting to eliminate the driver altogether. ‘The reason Uber could be expensive is because you're not just paying for the car, you're paying for the other dude in the car,’ said Travis Kalanick at Code Conference last year. ‘When there's no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle.’ In fact, a recent study by Columbia University estimates that New York City’s 13,000 yellow cabs could be replaced by just 9,000 self-driving Ubers, costing the passenger $0.50 per mile.

Cities could also be reshaped. Streets could be narrower because we wouldn’t need parking (the cars could park themselves further away). They would be greener, as people wouldn’t need to waste time guzzling fuel while they search for a parking spot. (The National Highway Traffic Safety Administration estimates that 30% of driving in business districts is spent hunting for a spot). And car parking lots could be changed into parks. The Rocky Mountain Institute believes that automated cars (which tend to be electric, or hybrid) could cut greenhouse emissions by up to 95% – a huge impact on the threat of global warming.

Then there’s us, the drivers. Morgan Stanley reckons that an additional $422bn could be generated for the economy because people could work while commuting. Kids could suddenly ‘drive’ and elderly people could be far more independent. If drink driving becomes a thing of the past, would that mean restaurant and bar revenues would increase? How would our spending habits change if a fully automated logistics chain was up-and-running, effectively eliminating the costs of delivery and guaranteeing us the products we want within one hour, or less.

And lastly, what about good old advertising? Could OOH become more prominent and interactive because advertisers wouldn't need to worry about distracting drivers on the roads? Is there space for new kinds of engagement on screens within cars?

This is all pretty speculative stuff, but I think there’s a wider learning here. Many people talk about driverless cars disrupting the automotive sector, but any innovation on this scale needs to be considered by a far greater section of the business community because the domino effect is likely to be extraordinary. Sure, the likes of Mercedes are trying to figure out how to remain relevant in this new-look world. But what about high street retailers, finance brands or leisure businesses?

So, whichever industry you’re in, pay attention to the road ahead. Because the industry that’s going to be worst hit by the auto revolution might not even be the car industry.